HP rejects the Xerox offer, but there are still some gaps

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Yesterday, HP's board of directors announced that it had rejected the acquisition offer received from Xerox, deeming it to be depreciating for the company and not respecting the best interests of the shareholders. Xerox has submitted a bid for $ 22 per share, in a mixed form cash and stock: it means that the company would have paid, for each HP share, 17 dollars and 0.137 Xerox shares.
HP's refusal begins to cast doubt on Xerox's actual ability to shape a deal: in fact, the company not only finds itself having to manage declining turnover, but in the future the possible new combined reality should have something to do with a rather significant debt, given that the acquisition operation could not take place exclusively with own funds and would therefore be financed by the banks.
However, HP did not close the door, and in a not too veiled way has hinted to be open to a better offer. In particular, the company's board of directors stated that in front of a "substantial commitment" of the Xerox management team and with access to relevant information regarding its business it would be possible to outline a clearer picture on the value of the agreement. In short, HP does not oppose a consolidation operation, but wants to have sufficient elements to convince itself that this could really be the best way to go in this phase.
In October, the company announced a downsizing plan that provides for the cutting of 9,000 positions, about 16% of the current workforce, by the end of the fiscal year 2022. Although not sailing in bad waters, thanks to growing profits registered in the summer quarter, HP still wants to follow a cost control strategy. A prospect of consolidation with Xerox would still make sense from a financial point of view (a saving of 2 billion dollars a year was estimated from this operation) but it would mean the end of an era: one of the Silicon Valley veterans would lose a good part of control over his destiny.



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